Campaign Finance Laws: Unfair and Ambiguous

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The Colorado Freedom

Campaign Finance Laws: Unfair and Ambiguous

by David Bryant

Bryant replies to Maysmith's defense of the 1996 campaign finance laws.

I have been watching the movement to enact new campaign finance laws in Colorado since Common Cause floated their first proposal in 1992. I have also been directly affected by Amendment 15 since its enactment in 1996 -- I have served as the treasurer for an issue committee, for my own candidate committee, and for the Libertarian Party of Colorado. I have filed dozens of campaign finance reports with the Secretary of State's office, and I have reviewed many reports filed by other people. Based on my direct observation and experience, I think Maysmith has overlooked some important facts and distorted several others.

The most important fact that Maysmith overlooks is obvious. Amendment 15 is riddled with loopholes. Since a person is defined to include a corporation, a partnership, or an association, and since the contribution limits are applied to persons individually, wealthy donors can legally funnel large amounts of money to the candidates of their choice by first creating a number of fictitious persons and later by passing funds through these imaginary entities.

Now Amendment 15 attempts to regulate such game-playing by stating that "No person shall act as a conduit for a contribution." (CRS 1-45-104(8)). So it is theoretically true that this simple expedient of spawning corporations cannot legally funnel money directly to a candidate. But those entities may make "independent expenditures" which can, and do, directly benefit particular candidates. And so long as these fictitious persons file all the required paperwork, the whole process is legal.

Who can afford to go to this much trouble to support a particular candidate? An independent voter of limited means who honestly believes that Joe X is the best man for the job? Of course not! Daddy Bigbucks who already owns six politicians and wants to install three more? Who else?

Maysmith distorts several facts. I will point out three of those distortions. When he says that "Far more people contributed money to candidates in 1998 than in previous years" he is comparing a set of figures (from 1998) to another set of figures (1996 and prior) which were collected under different reporting rules. In fact, the two sets of figures are incommensurate. When he says "Election law may be complicated but that does not mean that one cannot easily figure out what is, and what is not, legal" he clearly distorts the truth. How can one "easily" figure out a "complicated" law? Finally, when he says "The contention that campaign finance reform hurts third parties is mystifying" he objectifies his own personal judgment. The contention may mystify Maysmith, but it doesn't puzzle me a bit. I think it's obvious.

Let's consider each of these three distortions in more detail.

1998 was the first election year in which Amendment 15's reporting rules applied. In 1996 and prior years candidates were required to file financial disclosure reports, but political parties faced no such requirement. In previous years, most of the contributions to candidates (by dollar volume) came from political parties and other fictitious persons. In 1998, contribution limits were in place. The parties and other "committees" responded by directing their supporters to make many small contributions directly to candidates, instead of a few large contributions directly to the parties.

While it may perhaps be true that "Far more people contributed ... in 1998", it is certainly true that Maysmith is comparing apples to oranges. There is simply no objectively verifiable basis for his contention.

To say that a "complicated" law can "easily" be figured out is to engage in pure doublespeak. Let us take up the matter of the infamous T-shirts donated to Gail Schoettler's supporters. The T-shirts were not "contributed" directly to Schoettler, but to each of the delegates who was already committed to vote for Gail at the Democrats' state assembly in the spring of 1998. No attempt was made to hide the source of the "contribution" ... the donor in fact filed the paperwork required by CRS 1-45-107 ("Independent Expenditures"). The decision of the administrative law "judge" hinged on an interpretation of Colorado law (CRS 1-45-107(3)), which states that "Expenditures ... that are ... controlled by the candidate ... shall be considered a contribution to the candidate."

At the hearing Schoettler and her benefactor swore that this really was an independent expenditure and that there was no co-ordination or control. Other people, including the "judge," saw it differently. So there is a question of fact to be decided by a jury, and to date no such determination has been made. No trial has been held. The "judge" did not determine that this was a clear-cut violation -- she merely decided that probable cause to refer the case to the Attorney General's office for prosecution does exist. And she offered to let Schoettler off the hook if her campaign would pay a fine equal to 400% of the value of the T-shirts and waive the right of trial by jury.

How does Maysmith know what the truth is when, as a matter of law, the truth in this case has not yet been determined? I'm also interested to hear what he thinks of the latest strategy to damage your political opponent based on this particular case. First, set up an independent organization. Then make a "contribution" in the form of an independent expenditure on behalf of your opponent. Finally, report the whole mess to Common Cause and sit back while they file a complaint which your opponent must answer, and hope he gets sockoed with double or quadruple damages.

Do you honestly expect me to believe that this law is easy to understand? That it serves to make the political process any fairer or less partial than it already is?

Finally, let's consider the statement "The contention that campaign finance reform hurts third parties is mystifying." There's no mystery about it. Some observers do in fact say that campaign finance reform in the form of Amendment 15 damages small political parties. I'm one of them. Here are my reasons.

First, Amendment 15 has already caused more money to be spent on political campaigns in Colorado. In 1998 I saw ads on television for the offices of Secretary of State and State Treasurer. To my knowledge, no one had ever spent money on TV ads in previous races for these offices. And in general, there was much more political advertising in 1998 than Coloradans had previously been forced to bear during mid-term elections. The upshot of all this was that the smaller parties had more trouble making themselves heard.

Second, the small parties are now required to file frequent financial disclosure reports. During 1998 I personally devoted over 120 hours of my own time to these reports, diverting my attention from more important Party business. Smaller parties which can hardly afford to hire professional accountants to prepare the reports for them are placed at a distinct disadvantage by this provision of the law.

Third, the requirement that donors' names be disclosed to the government is a disadvantage to the Libertarian Party in particular, since libertarians generally are jealous of their privacy. During 1998 I more than once found myself in the uncomfortable position of telling Party supporters that I could not legally honor their requests for anonymity. Does Common Cause believe in freedom of speech and freedom of association for everyone? Or only for people who are willing to forfeit the right to privacy?

Finally, the smaller parties draw their financial support from a relatively tiny fraction of the population. Yet they must compete in a big political arena. Media buys are the only effective means of communicating a message to the public at large. Media buys are also very expensive. Under Amendment 15, the smaller parties are now prohibited from accepting large donations from wealthy individuals. Under the old rules, smaller parties had a chance to raise large sums of money from a few donors. The new restrictions definitely impede their fundraising efforts, and also their ability to advertise.

Maysmith may not agree with the arguments I have advanced. But he can hardly be mystified by them.

In short, I think the people who wrote and promoted Amendment 15 had the best intentions and very bad judgment. They failed to envision the many ways in which people would twist and evade this law. And now that events have proven how faulty their reasoning was, they are unwilling to accept the truth. They wish instead to substitute emotion and subjectivism for reason and dispassionate analysis. Maysmith's faulty arguments in support of campaign finance "reform" serve only to prove that this is so.

Ari Armstrong replies to Maysmith.

The Colorado Freedom